Scrapping of electricity spot market deal pushed

The Department of Energy (DOE) should scrap the contract between Philippine Electricity Market Corp. (PEMC) and Independent Electricity Market Operator of the Philippines Inc. (IEMOP) because it is invalid from the very beginning, according to Puwersa ng Baya­ning Atleta party list Rep. Jericho Nograles.

Nograles said in a statement that PEMC, IEMOP’s predecessor as the operator of the Wholesale Electricity Spot Market (WESM), “transition[ed] from a government-owned and controlled corporation (GOCC) into a fully privatized firm” without President Duterte’s approval.

Citing data gathered from House committee on energy hearings, the lawmaker said PEMC officials admitted that the entity had become private, particularly when Energy Secretary Alfonso Cusi relinquished chairmanship of the PEMC board when the WESM was in transition to a privately run operation.

PEMC held a ceremonial turnover of its chairmanship in July 2018, which it described as meant “to pave the way for the eventual assumption by the [IEMOP] of the functions as independent market operator for the WESM.”

To formalize and effect such transfer, PEMC and IEMOP executed an operating agreement in September 2018.

In February of the same year, WESM participants and Cusi himself approved a transition plan that called for the formation of an independent operator, which would realize the Electric Power Industry Reform Act (Epira) provision that the WESM should be run independently of government.

However, Nograles said the Governance Commission for GOCCs (GCG) confirmed during a hearing that PEMC needed to go through a process in order to become a private entity, in accordance with Republic Act No. 10149, or the GOCC Governance Act of 2011.

“To become a private entity, PEMC must seek the endorsement of the GCG to the President of the Republic who will then make the final approval,” he said.

Nograles added that since PEMC met neither requirement, the PEMC-IEMOP contract was void from the very beginning.

“The continued collection of market fees from consumers is illegal because the contract is illegal,” he said. “PEMC was never privatized. The President does not know that this happened.”

Earlier, PEMC insisted that the transfer to IEMOP was consistent with the Epira, saying that the latter was created following the approval of a transition plan for the creation of the independent market operator, “which was the result of a study and a series of consultations spearheaded by the PEMC transition committee created by the [DOE].”

The legislator had raised other concerns regarding IEMOP, including possible graft due to the conflict of interest as the private firm had employed the spouse of a government official related to the energy sector. Congress is conducting hearings to shed light on these charges.